Book Review: All the Devils are Here

I just finished reading All the Devils are Here, by Bethany McClean and Joe Nocera, one of the books which tries to tell the story of the financial collapse of 2008  (don't mind the 3.5 star rating, that's entirely driven by people complaining about the Kindle price.  Idiots).  Its a good book, but ultimately frustrating, because it doesn't really point to any concrete answers.  The authors admit this much, which is both honest and refreshing in a way.  Many books of this nature take on an issue and then try to tack on some proposed solutions at the end, regardless of their feasibility. 

The thing that struck me the most about this book is really how incomprehensible this all is to even an informed or interested reader.  I consider myself a person of decent intelligence with some grasp on finance and economics, but most of the book was still a struggle to follow.  This despite the efforts the authors make to lay things out as simply as possible.  My ego takes some solace in the fact that even the finance professionals who did all this stuff often had no clue about what was going on.  Of course, that feeling is more than offset by the anger that these people had no clue what was going on!

Even if you get past step 1, understanding the various mechanism and financial actions in play, the dollar amounts are simply staggering.  It amazing to think that there is so much money changing hands every single day in the financial markets.  Commercial banks, consumer banks, investment banks, mortgage originators, mortgage backers, hedge funds, trading houses, insurance companies: all moving trillions of dollars in the blink of an eye.

Despite the complexity, the take away from the book is pretty simple: greed and arrogance.  That's what caused and drove the crash.  Greed caused people to chase unrealistic riches, often times in unethical or stupid ways.  Arrogance allowed them to believe that the good times would never end, despite the fact that the good times always end.  I'm not sure what the answer is, and even if I did I'd be very pessimistic that the answer would be implemented and enforced properly.  That's probably the worst thing about this: this history in this book will be repeated.  The details will change but like any lazy sequel the underlying story will be the same.